California Barred From Seeking Damages From 23andMe Successor Over 2023 Data Breach

A U.S. bankruptcy judge ruled Friday that the state of California cannot seek monetary damages from the successor company to genetics firm 23andMe related to a 2023 data breach that affected an estimated 6.9 million customers. The decision halts the state's attempt to levy potentially millions of dollars in civil fines against the firm.

The Court's Ruling

U.S. Bankruptcy Judge Brian Walsh in St. Louis determined that 23andMe's Chapter 11 reorganization plan prevents California from pursuing monetary relief against Chrome Holding Co., the entity that now holds the former company's assets. According to the ruling, the state can still seek non-monetary remedies.

Judge Walsh ordered California to either dismiss its May 28 lawsuit, filed in San Francisco Superior Court, or amend it to remove all claims for monetary relief within 14 days. The judge noted that because the state was a party to the Chapter 11 case, it cannot now challenge the court's jurisdiction through a separate lawsuit.

Background of the Dispute

The ruling is a setback for California Attorney General Rob Bonta, who had accused 23andMe of failing to heed warnings about its system vulnerabilities and downplaying the severity of the breach. The state's lawsuit argued that bankruptcy courts should not become a "haven for wrongdoers" to escape state law enforcement actions.

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However, Judge Walsh disagreed that the reorganization plan created such a haven. His decision reinforces the legal authority of bankruptcy proceedings to resolve claims against a company undergoing restructuring.

The 23andMe Bankruptcy

Palo Alto-based 23andMe filed for Chapter 11 bankruptcy protection in March 2025. Last July, its assets were acquired for $305 million by TTAM Research Institute, a nonprofit controlled by 23andMe co-founder Anne Wojcicki.

Separately from the California lawsuit, the bankruptcy court has approved a compensation fund for affected customers. This week, Judge Walsh authorized a $32.46 million payment from the fund, bringing the total approved payout for customer claims to $46.75 million.